Home Buyer Disclosures 101
During the escrow process, you will be informed of specialized conditions that affect the home you wish to purchase. They may include the following:
Sellers of properties built prior to 1978 have the following obligations to you:
- Give you a HUD pamphlet entitled "Protect Your Family From Lead in Your Home"
- Disclose all known lead-based paint and related hazards and provide you with any available reports
- Include a standardized warning as an attachment to the contract
- Complete and sign statements verifying that requirements have been met
- Retain the signed acknowledgement for 3 years
- In addition, sellers must give you a 10-day opportunity to test for lead
California law requires sellers to disclose to you, via a "Natural Hazard Disclosure Statement" or NHD, if properties are located in one of six predetermined "natural hazard" zones. (If the property is not within one of these zones, sellers, of course, have no such obligation.)
The six zones are:
- A flood hazard zone as designated by the Federal Emergency Management Agency (FEMA)
- An area of potential flooding after a dam failure (also known as an inundation area)
- A very high fire hazard zone
- A wildland fire area, also known as a state fire responsibility area
- An earthquake fault zone
- A seismic hazard zone
If an NHD is delivered to you after you signed the Purchase Agreement, you will have three days to rescind the agreement. However, if you receive the NHD before you signed the Purchase Agreement then you cannot use the NHD to rescind.
Especially (but not exclusively) if you are buying a home in a newer area, you may be locating into a Mello-Roos tax district, and the seller must provide to you a "Notice of Special Tax" to let you know. If this notice is delivered to you in person, you have three days to rescind your offer. If it’s delivered via U.S. mail, you have five days to decide.
Basically, a "Mello-Roos Community Facilities District" is formed by a local government, district, or agency to finance public services and facilities including police and fire departments, ambulance and paramedic services, parks, schools, libraries, museums and cultural facilities.
If you’re buying a condominium, townhouse or other planned development (for purposes of this discussion, we will call them all "condominiums"), there are things you need to know about common areas (such as greenbelts and recreational rooms) and the homeowner’s association.
You will be required to make monthly payments, known as regular assessments, to maintain common areas, as well as special assessments to replace a roof or repair the plumbing, as determined by the homeowner’s association (HOA.)
Condominiums also may have regulations regarding architectural requirements, limitations on pets, and age restrictions (i.e., senior housing). These must be formally disclosed to you during escrow. You may receive this information via the following documents, to the extent that they exist and are available:
- Declaration of Restrictions: Commonly known as "CC&Rs", or Conditions, Covenants and Restrictions
- Articles of Incorporation or Articles of Association Bylaws
- All current financial information and related statements, including operating budget, estimated revenue and expenses, HOA reserves, estimated remaining life of major components (including roofs, plumbing etc.), and regular and special assessments
- A statement describing the HOA’s policies and practices in enforcing lien rights or other legal remedies for default in payment of its assessments
- A summary of the HOA’s property, general liability, and earthquake and flood insurance policies
- On existing HOA’s, a statement describing any restrictions on the basis of age, such as authorized senior citizen housing
Many smaller HOAs will not have all of these documents, but must provide what they do have. We recommend that you review these documents thoroughly, because they will affect you firsthand.
If a registered sex offender lives in the neighborhood in which you want to locate, you have the right to investigate – this is made possible due to a 1996 statute known as "Megan’s Law." (Note that the seller does not have an obligation to provide this information to you.)
To investigate, you may:
- Log on to: http://www.meganslaw.ca.gov
- Call (900) 463-0400 to access the California Sex Offender Information Database. (There is a $10 charge to check names by telephone, maximum 2 names per call.)
- Call your local police department to locate a CD-ROM records viewing station.